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FCNR(B) impact: RBI's net short forward book swells to record $200 billion

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The Reserve Bank of India’s outstanding net short dollar position in the forward book surged to a record $200.06 billion at August-end from $136.77 billion at July-end, data released by the central bank on Monday showed.Short positions with a maturity of less than one year rose to $55.15 billion at the end of August from $47.66 billion in July, while positions with a maturity of more than one year nearly doubled to $176.57 billion from $91.54 billion.At the same time, the RBI's long dollar positions increased to $31.66 billion at August-end from $2.43 billion at July-end. All of these positions mature within one month. Consequently, after adjusting for long positions, the RBI's net short position in contracts maturing within one year fell to around $23.5 billion in August from $45.2 billion in July.“The short positions have increased on the back of FCNR(B) flows. The RBI has also let some positions to mature because looking at the data, if we include the amount of inflows, the short position in more than one year should have been around $218 billion,” said a market participant. “The RBI has been conducting sell/buy swaps too, and they have been conducting them in September as well, so technically the total short positions should have reduced,” the person added.Of the $200 billion net short dollar position, $19.54 billion was in one-month contracts, $11 billion in 1-3 month tenures, $24.60 billion is set to mature between three months and a year, and the remaining $176.57 billion was in contracts with a maturity of more than one year.Market participants said that given that a large part of the dollars raised through the FCNR(B) swap facility are borrowed and will have to be returned over the next three to five years, the central bank is likely to limit the use of spot intervention as much as possible.“The RBI has been conducting sell/buy swap in September as well, and the RBI’s window is closed now. We expect the short positions to have peaked in August,” said the treasury head at a private bank.

 

-Business Standard 01st October,2026 

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